• FTSE 100 index closes up 28 points
  • Sterling dips
  • Wall Street stocks higher

5.30pm: FTSE 100 closes higher

FTSE 100 index closed in positive territory on Friday, but off its earlier highs, as traders’ fears over a second wave of coronavirus appeared to ease.

Britain’s benchmark index of leading shares closed up over 28 points, or 0.47%, on the day at 6,105.  But over the week as a whole, it shed 5.8%

On Wall Street, benchmarks were also up, with the Dow Jones Industrial Average up over 341 points at 25,470.

The S&P 500 gained around 30 at 3,032 and the Nasdaq put on over 78 at 9,570.

“Stock markets have rebounded from yesterday’s horrendous declines as traders’ fears have faded. A portion of the declines that were seen yesterday have been recouped, but stocks are still down since Wednesday’s close,” said David Madden, analyst at spreadbetter CMC Markets.

“The landscape hasn’t changed in the past 24 hours as there is still a possibility of a second wave of Covid-19 cases as countries reopen their economies. It is possible that yesterday’s move was just a knee-jerk reaction to the reports of rising cases, as traders have become accustomed to falling infection rates.”

Top riser on Footsie was publisher Pearson (LON: PSON), which surged 11.7% to 573p. The rise came on the back of the news that Cevian Capital, an investment company, has acquired a 5.4% stake.

3.45pm: Sterling turns red

The Footsie trimmed its gains ahead of close, after a nearly 100-point rally following a buoyant US open.

London’s leading index was up 64 points to 6,139 in the late afternoon while sterling dropped 0.17% to US$1.2578.

According to analysts at OANDA, this bounce is not expected to last for long, although the week ahead is coming with central bank decisions providing stimulus.

Among these, the Bank of England is expected to announce a £100bn increase to their asset-purchase target. 

“The stock market selloff will unlikely be a one-and-done event as COVID-19 continues to intensify in the US and will likely disrupt many states’ reopening plans,” said OANDA’s Edward Moya.

“Virus uncertainty could support another 5-10% over the coming weeks, but all the stimulus efforts from policymakers globally will prevent a complete collapse back to the March lows.”

2.45pm: Dow Jones opens with 700-point leap

The Footsie was on a late-afternoon sprint as Wall Street leaped at open.

London’s leading index was up 89 points to 6,165, the Dow Jones surged 746 points to 25,874 and the S&P500 added 76 points to 3,078.

As expected, stocks recouped after Thursday’s big losses.

However, many states are reporting new coronavirus infections, with rises in new cases above 40% in Arizona, Utah and New Mexico.

Infections in Florida, Arkansas, South Carolina and North Carolina were up 30% last week, according to Reuters.

2pm: UK will not extend Brexit transition period

The Footsie was still up 70 points to 6,146 after lunch but sterling trimmed its gains, now being just above the flatline at US$1.2607.

Michael Gove officially ruled out an extension period for Brexit with a statement on Twitter.

The Times reported earlier today that full border checks with the EU will be eased post-Brexit, amid fears they may worsen the economic damage brought by the pandemic.

The stocks were seemingly unphased as investors took advantage of the market’s weakness after the rally seen over the first weeks of June.

“A huge reason why Europe feels comfortable enough to post such gains is that the Dow Jones is aiming for a 600-point rebound when the bell rings on Wall Street,” said Connor Campbell, analyst at Spreadex.

“It’s a sign of just how staggering Thursday’s losses were that such a surge would only recoup a third of that decline.”

12.20pm: Rebound in sight for US stocks

The Footsie ordered a few more points at lunchtime, rising by 77 to 6,154, stubbornly ignoring the UK GDP contraction in April.

US stocks are also expected to rebound following yesterday’s dramatic losses – although the 6.9% of the Dow Jones wasn’t even in the top three worst days this year, as some pointed out.

The expected recovery today may surprisingly hold up as investors may not be deterred by yesterday’s Fed forecasts or fears of a second wave of coronavirus infections.

“[It] could just be a case of those declines being slightly pared back but these markets are very strange and I wouldn’t be surprised if it’s instead being perceived as a “buy the dip” opportunity,” said Craig Erlam, analyst at OANDA.

“Forecasts haven’t worried investors for now and we’ll need to see dramatically bigger spikes in new cases for states to even consider tightening lockdown measures again. This feels like more of an excuse to take some profit in a market that has bounced back remarkably to the point that there’s a huge disconnect between stock markets and economic reality.”

11.40am: Games Workshop higher as recovery tops expectations

The Footsie trimmed its gains before lunch, bagging 63 points to 6,140.

In the FTSE 250 index, Games Workshop Group PLC (LON:GAW) surged 10% to 7,800.04p after announcing a recovery path that topped expectations as more people find a love for miniature wargames.

The Warhammer owner is now operating at its warehouses, while 306 of its 532 stores in 20 countries have reopened.

Sales for the year to Mat 31 are estimated to be around £270mln, while its pre-tax profits will be “no less” than £85mln.

10.35am: Carnival jumps on fresh round of trip cancellations

The Footsie added 77 points to 6,153 in late morning, while sterling advanced 0.2% to US$1.2626.

“Markets appear to have stabilised after yesterday’s crash in global equities, with traders attempting to figure out whether this is finally the beginning of the second major selloff,” said Joshua Mahony, analyst at IG.

“We appear to be shifting from a phase where everyone looks towards the reopening as a cause for optimism, to one where we begin to refocus on Covid case numbers with trepidation. The gains we are seeing today highlight the fact that a second wave still remains far from guaranteed, yet we are certainly likely to see volatility and market sensitivity pick up in the coming weeks as Covid cases roll in.”

Carnival PLC (LON:CCL) was again one of the top risers in the blue-chip index, jumping 10% to 1,303.68p after announcing a fresh round of cancellations.

Its arm Holland America Line extended the pause of cruise operations and cancelled additional departures from the Canadian port of Vancouver this year and some trips in Hawaii in 2021.

Guests can choose between refunds or future cruise credits of 1125% of the value paid for the cancelled trip.

9.50am: British Airways owner IAG, easyJet, Ryanair rise on legal action against quarantine rules

The Footsie turned green in mid-morning, bagging 40 points to 6,117.

Despite the dire UK GDP figures for the month of April released earlier this morning, the markets held up well.

“The FTSE 100, packed with multinational companies, is not really a barometer for the UK economy but even the more domestic-facing FTSE 250 did not suffer severe damage,” commented AJ Bell investment director Russ Mould.

“Investors are not stupid, they know April was arguably the height of the lockdown. The unprecedented nature of the fall in economic activity just mirrored the unprecedented act of effectively shutting down a modern economy.”

Travel stocks were on the rise after British Airways owner International Consolidated Airlines Group (LON:IAG), easyJet PLC (LON:EZJ) and Ryanair PLC (LON:RYA) began legal action against the government’s quarantine rules.

The airlines filed papers in the high court to challenge the 14-day quarantine for inbound travellers, mandatory as of June 8, which they say is flawed and will have a devastating effect on the sector.

They proposed Westminster returns to the policy enforced in March, whereby only passengers coming from higher-risk countries are required to isolate.

“This would be the most practical and effective solution, and enables civil servants to focus on other, more significant issues arising from the pandemic while bringing the UK in line with much of Europe which is opening its borders mid-June,” the joint statement read.

Shares in IAG and easyJet jumped 8% to 284.72p and 823p respectively, while Ryanair advanced 3% to €11.35.

8.45am: Footsie licking its wounds

The FTSE 100 made a quiet, but negative start to proceedings on Friday as traders absorbed the scale of the devastation wrought by the coronavirus (COVID-19) pandemic on the UK economy.

The index of UK blue-chips opened 10 points lower at 6,066.24, albeit having notched up a triple-digit plunge on Thursday.

Figures for April showed UK gross domestic product fell by over a fifth as the UK went into lockdown. The drop from January is over 25%, which dwarfs the 6% peak to trough decline seen during the credit crunch, which previously was the steepest in post-war history

“The economy will take a long time to recover from the pummelling inflicted by the COVID-19 pandemic,” said Samuel Tombs, chief economist at Pantheon Macroeconomics.

US traders staggered home in need of a cold compress following a near 1,900-point drop in the Dow Jones Industrials Average overnight on Wall Street amid jitters over the domestic and world economies.

Luckily a lot of the blood-letting had already been done on this side of the Atlantic so the response to the worse-than-expected UK GDP figure was a little more muted than might have been expected.

On the market, the precious metals stocks gave back a lot of Thursday’s gains with Mexican silver producer Fresnillo (LON:FRES) leading the Footsie fallers with a 2.6% loss.

Topping the leader board was educational publisher Pearson (LON:PSON), which was up 8.6% after activist investor Cevian Capital was unmasked as a 5.4% shareholder.

Events group Informa (LON:INF) was up 5.2% after revealing trading wasn’t quite as bad as anticipated.

Proactive news headlines:

The City Pub Group PLC (LON:CPC) has highlighted “further significant growth” in trading in its 2019 financial year, while also updating on its plans for the post-coronavirus environment. For the year ended December 29, 2019, the pubs group reported adjusted underlying earnings (EBITDA) of £9.1mln, up 15.4% year-on-year, while revenues jumped 31% to £60mln. Like-for-like sales also increased by 1.7% in the year against what the company said was a “tough comparable period” following the World Cup and 2018’s summer heatwave.

Kavango Resources PLC (LON:KAV) has appointed specialist geological modelling firm, Mira Geoscience to help select drill targets at the Kalahari Suture Zone ( KSZ) nickel/copper prospect. Mira Geoscience is an acknowledged specialist in advanced geological and geophysical 3D modelling, the company noted, including the interpretation of mineral systems and drill target identification.

Ferro-Alloy Resources Limited (LON:FAR) said it has raised US$300,000 through a bond issue on the Astana Stock Exchange in Kazakhstan as the group also announced that it restarted its production operations in the country. The vanadium miner said investors have subscribed for 150 of its bonds with a nominal value of US$2,000 each. The bonds are unsecured with a three-year term and bear interest at 7.5%, paid twice-yearly. Around 50 of the bonds have a maturity date of June 5, 2023, while the remaining 100 bonds have a maturity date of June 11, 2023. Meanwhile, the company said production from the hydrometallurgical process was restarted on June 1, 2020, and that it now has “significant production” from both its hydrometallurgical and pyrometallurgical process routes.

Galantas Gold PLC (LON:GAL) reported a C$3.56mln loss for 2019 as the Northern Ireland based miner’s underground operation continues to be held back amid restriction over blasting. The police are required to supervise underground mine blasting, using explosives, at the mine near Omagh and the company had to halt operations during the fourth quarter because the level of blasting activity was insufficient. It was subsequently working with the Northern Ireland authorities over arrangements to resume underground blasting, and, following significant investment it continues to await approval for increased blasting. Production continued using lower grade material, until the coronavirus pandemic temporarily suspended those operations too, before work resumed in late May this year.

Echo Energy PLC (LON:ECHO) has told investors it is looking positively to advance value creation opportunities, as it remains “well-positioned” amid the challenges facing small cap oil and gas firms in 2020. In its financial results statement for the twelve months ended December 31, 2019, the company confirmed a stronger end to the year, with net production averaging 2,505 barrels oil equivalent per day (bopd) in the months of November and December. A review of reserves at the end of 2019 confirmed a reserve base of 3.8mln barrels oil equivalent (boe). Operationally, the company completed well and seismic programmes during the year while on the corporate front it conducted a successful portfolio restructuring.

Tiziana Life Sciences PLC (LON:TILS)  said it has extended its ‘at the market’ sales agreement with US investment bank ThinkEquity until Jul 31. The facility allows the group to sell American depository shares worth up to US$20mln.

The Brunner Investment Trust PLC (LON:BUT) has declared a first interim dividend of 4.67p per ordinary share, payable on July 23, 2020, to holders on the register at the close of business on June 19, 2020. The group said its board anticipates that the second and third interim dividends will be maintained at this rate, and an unchanged final dividend of 6.00p will be proposed for the year ending November 30, 2020, giving a dividend for the year of 20.01p, a small increase on the previous year.

Tower Resources PLC (LON:TRP), the AIM-listed oil and gas company with its focus on Africa, has said its annual general meeting (AGM) will be held at 11.00am on July 6, 2020, at Albany, London W1. As a result of the ongoing coronavirus pandemic and the current prohibition on public gatherings, the AGM is being convened as a “closed meeting” and members will not be permitted to attend, shareholders are however invited to watch or listen via Zoom using the details provided in the Notice of Meeting.  The procedures for proxies are also set out in the AGM notice which is available on the company’s website: www.towerresources.co.uk

7.00 am: Footise set for further grief

The FTSE 100 index is expected to fall back again on Friday, albeit less precipitously than Thursday’s plunge, after a slump overnight in New York continued in Asia caused by coronavirus (COVID-19) second wave worries and after the Federal Reserve’s downbeat economic assessment on Wednesday.

Spread betting firm CMC Markets expects the blue-chip index to open around 30 points lower at 6,046, having plunged 252.43 points, or 4% on Thursday to 6,076.70, wiping out all of a recent optimistic rally.

Overnight in New York, the Dow Jones Industrials Average tumbled 1,869, or nearly 6.9% to close at 25,128.17, meanwhile the broader S&P 500 index shed 5.9%, and the tech-laden Nasdaq Composite lost 5.3%.

The turmoil carried over to Asian markets today, though more modestly, with Hong Kong’s Hang Seng index losing 0.9%, and Tokyo’s Nikkei 225 index off 1.2% currently.

David Madden, market analyst at CMC Markets UK commented: ”Yesterday was like a flashback to the madness that was seen in markets in February and March as fears about a possible second wave of Covid-19 prompted intense selling.

“The sharp declines that were registered yesterday must be put in context with the major gains that have been racked up in recent weeks.”

He added: “Lately governments have been taking steps to ease up on the lockdown restrictions and that was a major reason for the bullish run in equities. As economies slowly reopened, there was an uptick in economic activity. Broadly speaking, the manufacturing and services reports from countries around the globe saw a decent rebound from April to May, so the further reopening of economies gave traders hope that things would continue to improve.

“Reports from Texas and California, and a number of other US states, showed the recent loosening of restrictions has led to a jump in the number of new COVID-19 cases, which sparked a brutal round of selling yesterday.”

Madden concluded: “There is an argument to be made that equities were due a decent correction in light of the gains made in the past three months. On the other hand, economies can’t stay locked down forever so a jump in the infection rate is going to be the cost of trying to get things back to normal. Policy makers will have difficult a task ahead of them as they try to balance the health and economic risks.”

UK GDP to be dire

On the diary, the main UK economic data of the week is scheduled for Friday, when the latest gross domestic product, industrial production and trade numbers are due from the Office of National Statistics, while the company news diary is fairly light.

UK GDP in April is expected to have fallen almost 19% from the month before, following March’s 5.8% drop.

“Output in some sectors — such as retail — initially was supported by stockpiling in March, before slumping severely in April,” according to Pantheon Macroeconomics.

“In addition, many construction sites initially remained open in late March — regulations never forced them to close — before shutting completely in April. And the slump in manufacturing output likely deepened as more time elapsed, due to component shortages and depleted work backlogs.”

Significant events expected on Friday:

Finals: Volex PLC (LON:VLX), Hornby PLC (LON:HRN)

Trading update: Bakkavor Group PLC (LON:BAKK)

Economic data: UK GDP, US Michigan consumer sentiment

Around the markets:

  • Sterling: US$1.2591, down 0.1%
  • Gold: US$1,725 an ounce, up 0.4%
  • Brent crude: US$37.73 a barrel, down 0.2%

City headlines:

  • Lloyds Banking Group has been fined £64mln by the City watchdog for failing to treat mortgage customers fairly after they fell into financial difficulty – The Guardian
  • Ocado is suing Jonathan Faiman and his firm Today Development Partners over alleged corporate espionage – The Times
  • WPP has appointed Angela Ahrendts, the former head of retail at Apple and chief executive of Burberry, to its board – Financial Times
  • Over a third of Morrisons investors rebelled against the supermarket’s pay policy over its generous pension allowances for senior directors – The Times
  • In a significant policy U-turn, the British government has abandoned its plan to introduce full border checks with the EU on January 1 amid pressure from businesses not to compound the chaos caused by coronavirus – Financial Times
  • Some of the UK’s biggest employers announced mass redundancies yesterday, with more than 8,000 jobs to be cut, in the latest blow to the economy – The Times
  • Snap is inviting developers to build slimmed-down versions of their own apps into its Snapchat platform – Financial Times
  • UK metals magnate Sanjeev Gupta has launched a drive to slash costs by 30% across his international steel, aluminium and energy empire – Financial Times
  • The European Union plans to file formal antitrust charges against Amazon over its treatment of third-party sellers – The Times
  • Pradeep Parameswaran, formerly head of Uber’s India and south Asia operation, has been named a new head of its Asia-Pacific business – Financial Times
  • Germany is launching a travel industry lifeboat to protect customers’ deposits after thousands of holidaymakers suffered losses from the collapse of Thomas Cook – The Daily Telegraph
  • Bailed-out German flag carrier Lufthansa is to axe 22,000 jobs as the airline grapples with a collapse in demand – The Daily Telegraph
  • Beer sales slumped to their lowest level in 20 years in the first three months of the year, as lockdown forced the UK’s 47,000 pubs to shut up shop – The Guardian